Taiwan’s forex reserves down for 3rd straight month in December

Jan 05, 2017Medical & Health CareComments Off on Taiwan’s forex reserves down for 3rd straight month in December

Taiwan's foreign exchange reserves as of the end of December fell for the third consecutive month due to a drop in the value of the euro, which has been part of the central bank's portfolio to manage the country's forex reserves, the bank said Thursday.

As of the end of December, Taiwan's forex reserves totaled US$434.20 billion, down US$144 million from a month earlier since the euro fell about 1 percent against the U.S. dollar in the month, the central bank said.

The bank said that the return from its management of the forex reserves was offset by a weaker euro when the assets denominated by the European currency were calculated in U.S. dollar.

Foreign investors owned a total of US$299.6 billion worth of local securities, bonds, as well as Taiwan dollar-denominated deposits as of the end of December, down US$4.2 billion or 1 percent from the end of November.

The assets owned by foreign investors accounted for about 69 percent of Taiwan's total forex reserves, the central bank added.

The decline in securities, bonds and Taiwan dollar denominated deposits held by foreign investors resulted in foreign fund outflows in December, when a net fund outflow totaled US$1.95 billion, marking the third consecutive month for foreign investors to record a net outflow from Taiwan, the central bank said.

Harry Yen (???), head of the local central bank's foreign exchange department, said that the global economy has entered another era of uncertainty in 2017 since U.S. President-elect Donald Trump, who has advocated protectionism, will take office on Jan. 20, and the United Kingdom will kick off a process in March to leave the European Union.

In addition, Yen said, France, the Netherlands and Germany will hold general elections later in the year, which could raise uncertainty over the world's economy.

While the global financial market will likely counter volatility down the road, Yen said, the central bank will continue to watch closely the forex market in a bid to stabilize the Taiwan dollar and maintain the market order.

On Thursday, the U.S. dollar closed down NT$0.298 at NT$31.962, the first time the greenback dipped below NT$32 since Dec. 19 after the U.S. Federal Reserve voiced concerns over a stronger U.S. dollar and the Chinese yuan staged a significant rebound, dealers said.

The local central bank was believed to have entered the market in the late trading session, helping the U.S. dollar recover part of its earlier losses, dealers added.

Meanwhile, the Ministry of Finance (MOF) said Thursday that the debts shouldered by the Taiwan government for 2015 totaled NT$6.76 trillion (US$212 billion), down NT$57.2 billion from a year earlier on the back of the government's efforts to improve its financial structure.

The MOF said that the total debt shouldered by the government made up 40.31 percent of Taiwan's gross domestic product, a ratio far below that of many developed countries.

Japan's debt-to-GDP ratio hit 248 percent, the highest among the G20 countries, followed by Italy with 132.7 percent, the United States with 105.2 percent, France with 96.1 percent and Canada with 91.5 percent, the ministry said.

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